Thursday, 2 May 2019

The fate of Reserve Bank of Zimbabwe (RBZ) governor John
Mangudya's stay in office remains a mystery after his first term lapsed on
Tuesday amid indications that government is yet to extend his contract of
employment.

Mangudya was appointed in 2014 succeeding Gideon Gono whose
term was marked by record inflation, low foreign currency reserves and lack of
confidence in the formal banking system.

Information gathered by Business Times shows that Mangudya
is yet to sign a new contract of employment following the lapse of his new
term.

"Unfortunately, I can't discuss the specifics of my
contract as it hangs within the appointing authority which is the government of
Zimbabwe. I just continue to work as usual and as my superiors have told me.

"All the announcements will be done by the employers
and I don't know when and how…. Just watch the space and see how it goes,"
Mangudya said.

Questions sent to Finance minister Mthuli Ncube were not
responded to and his phone went unanswered.

Last November, Deputy Chief Secretary in the Office of the
President and Cabinet (Presidential Communications) George Charamba said
President Emmerson Mnangagwa would extend Mangudya's contract.

''The President is very clear on the Reserve Bank
Governor's tenure and his performance. Not only is he there to stay but the
President is about to renew his contract for a second tenure,'' Charamba said.

Under the RBZ Act, a central bank governor can only serve a
maximum of two terms.

"Subject to subsection (3), the Governor and every
Deputy Governor shall hold office for such period, not exceeding five years, as
the President may fix on his appointment. Subject to subsection (3), upon the
expiry of the term of office of the Governor or a Deputy Governor, the
President, after consultation with the Minister, may re-appoint him or extend
his term of office," reads the Act.

Last year, the return of Andrew Bvumbe who left his
executive directorship with the World Bank sparked speculation that the special
advisor to President Emmerson Mnangagwa on debt issues would take over the
reins.

In 2009, government ditched the local unit for a basket of
multiple currencies mainly dominated by the United States dollar.

Mangudya had a terrific start to his tenure after
announcing the bank was going back to its core functions—banker to Government,
administrator of the national payment system, regulator of financial
institutions, manager of Exchange Control, supervisor of bank use

promotion and suppression of money laundering, lender of
last resort and policy advisor to Government.

In 2015, Mangudya demonetised the Zimbabwean dollar which
had been discarded after the economy embraced a multi-currency regime dominated
by the United State dollar in 2009.

He introduced the bond note, a surrogate currency, under
the US$200m export incentive facility backed by the African Export-Import Bank.

The bond note was pegged at 1:1 with the dollar. Experts at
the time warned that the surrogate currency would drive away the greenback from
the system. Mangudya removed the parity in February when he allowed the
greenback to float. The bond note is now part of the RTGS dollar.

The prevailing foreign currency shortages have fuelled
inflation, with annual inflation reaching 66,8 percentin March, the first time it has reached such
levels since 2009.

This has raised fears the economy would go back to the
hyper-inflationary era of 2007-8. Mangudya is on record saying the demand for
foreign currency is a sign of an expanding economy and an increase in
production will generate more forex for the economy. Business Times